National Securities Clearing Corporation's (NSCC) Fund/SERV system is the industry standard for the automated and centralized processing of mutual fund orders, account registration and centralized net settlement. In November 1996, NSCC successfully implemented enhancements to Fund/SERV enabling two mutual fund companies to initiate, acknowledge, confirm and settle the transfer of Individual Retirement Arrangement (IRA) accounts between two funds, utilizing a centralized, standardized and automated process. This method of executing fund to fund transfers is referred to as the Transfer of Retirement Assets (ToRA) service.

This automated transfer process, when originally designed, required a minimum of two days between acknowledgment and confirmation. This was done to allow sufficient time for the Delivering Fund to review the request and verify data prior to the actual settlement of the transfer. After using the system, participants have indicated that this two-day period is not necessary, and that verification can be completed in one day.

In addition, provisions of the Taxpayer Relief Act of 1997 have resulted in the need to include new tax withholding fields in the ToRA record layouts. These modifications, detailed in this notice will provide additional features and flexibility for all participants using the ToRA service.

The current ToRA process requires that ToRA Confirmations (Record Type 212) submitted by the Delivering Fund can not be submitted prior to Acknowledgment Date + 2 days. Subject to SEC approval, this processing time frame will be modified to allow ToRA Confirmations to be submitted on Acknowledgment Date + 1 day, thereby potentially shortening the process by one day. Timeframes for the ToRA Acknowledgment and ToRA Confirmation processes will not otherwise be changed.

 II. TAX WITHHOLDING FIELDS: IRA WITHHOLDING PERCENTAGE AND WITHHOLDING AMOUNT

As a taxable event, Traditional IRA to Roth Conversion IRA conversions have necessitated the development of two tax withholding fields in order to report any tax withheld at the time of the conversion. The IRA Withholding Percentage and Withholding Amount fields have been created to allow the Receiving Fund to request that the Delivering Fund withhold a certain percentage of the requested retirement assets and report the amount withheld on the ToRA Confirmation.

Traditional IRA to Roth Conversion IRA transfers (Receiving/Delivering Plan Type 9) will be the only ToRA scenario wherein the IRA Withholding Percentage and Withholding Amount fields will be allowed. The ToRA process of completing a Traditional IRA to Roth Conversion IRA transfer with tax withholding should function as follows:

The Receiving Fund inputs a ToRA Initiation Record (Record Type 210) indicating a transaction type of either a Full or Partial Distribution to Alternate Address, indicating a Receiving Fund Plan Type of Traditional to Roth Conversion IRA, and specifying the IRA Withholding Percentage to be withheld.

In response, the Delivering Fund submits a ToRA Acknowledgment Record (Record Type 211) containing the account registration data carried on their books, the current market value of the account, and a reflection of the IRA Withholding Percentage to be withheld as per the request of the Receiving Fund.

One business day after sending in the ToRA Acknowledgment (A+1), the Delivering Fund should send in the ToRA Confirmation (Record Type 212) containing the amount to be settled by NSCC, the withholding percentage, and the amount of the withholding. All confirmed transfers are then pended for same day settlement on the next available settlement day.

 III. REVISED RECORD LAYOUTS

The revised record layouts for the Transfer of Retirement Assets (ToRA) service as outlined in this notice will be available on NSCC’s Year 2000 file formats web page at www.y2000.org/nscc beginning January 29, 1999 along with all other current Mutual Fund Services record layouts.

IV. IMPLEMENTATION PLAN

Members of the ICI Transfer of Retirement Assets User Group have committed to testing these enhancements prior to the effective date of March 29, 1999. Beginning March 15, 1999 ToRA users can begin testing these enhancements in NSCC’s Participant Test Region. Refer to Important Notice A4770 dated May 15, 1998 for information on this test region. NSCC encourages the testing of these changes by all ToRA participants prior to implementing these enhanced processing capabilities.

 For additional information regarding the Transfer of Retirement Assets (ToRA) service or other Mutual Fund Services, please contact your NSCC Account Manager or NSCC’s Mutual Fund Services Hotline at (212) 412-8893. Questions, comments or concerns regarding these enhancements to the Transfer of Retirement Assets (ToRA) service outlined in this notice should be directed to the undersigned at (212) 412-8848.

Adam H. Purcell
Mutual Fund Services Product Development

8-DIGIT FIXED LENGTH LAYOUTS

1. Transfer of Retirement Asset (ToRA) - Record Type 210

a. A new field added to record 3:

2. ToRA Acknowledgment/Confirmation/Reconfirmation - Record Types 211/212/213

a. A new field added to record 3:

b. A new field added to record 4:

8-DIGIT VARIABLE LENGTH LAYOUTS

1. Transfer of Retirement Asset (ToRA) - Record Type 210

a. A new field added:

2. ToRA Acknowledgment/Confirmation/Reconfirmation - Record Types 211/212/213

a. Two new fields added:

6-DIGIT FIXED LENGTH LAYOUTS

1. Transfer of Retirement Asset (ToRA) - Record Type 210

a. A new field added to record 3:

2. ToRA Acknowledgment/Confirmation/Reconfirmation - Record Types 211/212/213

a. A new field added to record 3:

b. A new field added to record 4:

6-DIGIT VARIABLE LENGTH LAYOUTS

1. Transfer of Retirement Asset (ToRA) - Record Type 210

a. A new field added:

2. ToRA Acknowledgment/Confirmation/Reconfirmation - Record Types 211/212/213

b. Two new fields added: